Manhattan’s Luxury Market Retreats

The ultraluxury apartment market in Manhattan fell back down to earth in the third quarter, while the rest of the market had modest gains in sales and rising prices, according to industry reports.

The median sales price of new development, which is dominated by luxury apartments, dropped 23 percent to $2.8 million, compared with the same period last year, according to a report by Douglas Elliman.

Despite the steep drop off, a number of big-money sales nonetheless pushed the overall median sales price to $1.17 million, up 9.3 percent from last year. Resales rose 1.9 percent to a record $995,000, the report showed.

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A model apartment on the 86th floor of 432 Park Avenue.CreditDBOX for CIM Group & Macklowe Properties

The pullback at the top of the market is the latest evidence that the $10 million-plus building boom has peaked, analysts said.

“That era is just about over,” said Jonathan J. Miller, president of the appraisal firm Miller Samuel, which prepared the Elliman report. Many of the record-breaking sales that inflated average prices over the last several quarters were signed years ago, on apartments that were still under construction, and that pipeline is expected to finally dry up this year, he said.

The frequency of ultraluxury sales, defined as $10 million or higher, is also on the wane. The number of new development sales over $10 million fell 42 percent, from 43 to 25, compared to the same period last year, according to a Halsteadreport.

Among the reasons for the high-end cool-down, the report cites slowing sales at the recently completed 432 Park Avenue, the super-tall residential tower on Midtown’s so-called Billionaire’s Row, where a number of eye-popping sales took place last year, including the roughly $88 million sale of a full-floor penthouse.

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A view of Central Park from the model apartment on the 86th floor of 432 Park.CreditDBOX for CIM Group & Macklowe Properties

Out of 106 apartments, not including ancillary staff units, 82 units, or 77 percent, have recorded sales with the city, said Gabby Warshawer, the director of research at CityRealty, a real estate data firm. Just 12 of those sales were recorded this year, she said. A spokesman for the project said the developer, Macklowe Properties, does not comment on sales.

In spite of the slowdown, other luxury projects have still set audacious sales goals. Central Park Tower, a project under construction at 217 West 57th Street, anticipates sales in excess of $4 billion, according to documents filed with the state attorney general, making it potentially the most expensive residential tower in the city. Sales at that building have not yet been recorded, Ms. Warshawer said.

There are other signs of adjustment taking place. The average time to sell an apartment rose 27.8 percent to 101 days, compared to the same period last year, according to the Elliman report. Buyers also had more leverage, scoring an average listing discount of 5.5 percent, up from 2.9 percent.

“The comment is constantly made that the buyers have left the market. But I think the bigger issue is that the buyers are there, but not willing to pay 2014 pricing,” said Mr. Miller.

If the slowdown in new development is symptomatic of a lull in luxury sales, then the strength of co-op sales may suggest a surge in the entry- and midlevel markets.

“It’s provided a relief valve for people pressed for affordability,” Diane M. Ramirez, the chairman and chief executive of Halstead said about the resilience of co-ops, which tend to be older and less expensive than condos.

But affordability remains a relative term in Manhattan. As a report from Stribling & Associates noted, there were more sales in the third quarter of apartments over $5 million than those under $500,000.